Since its implementation, the GST rates have caused confusion in the hotel industry with hotel associations opposing the 28% taxation on luxury hotels.

Travel Portal Booking.com said travellers now prefer to book home stays and villas for their holidays.

NEW DELHI:Francisco De Braganca, owner of the DoubleTree by Hilton hotel located in Arpora, Goa, is a worried man, as winter bookings for the coming tourist season in Goa — the busiest time of the year —are down 20% from last year.

“Bookings for the coming winter season are looking bleak, and in case the situation isn’t corrected soon, we will not be able to repay our bank loans. Compared to last year, bookings are much less as guests and travel agents are booking hotels that charge 18% tax,” said Braganca.

Goa’s five-star hotels have seen a steady drop in occupancies over the past two months ever since the introduction of goods and services tax (GST) rates, said Braganca, who is also the former president of Travel &Tourism Association of Goa.

“Every five-star is showing a dip of more than 20% in revenues with the burden of 28% GST,” he said. Braganca is not alone. Luxury hotel owners in other leisure destinations and chains are anticipating a drop in occupancies for the upcoming winter season, given the 28% GST slab on rooms with tariffs of Rs 7,500 and above. Tariffs in peak season go up by as much as 65% for some luxury chains in leisure destinations.

“A 28% tax on hotel rooms is unsustainable. Not only are we impacting foreign tourism in a significant way, but even domestic tourists have a big problem paying 28% tax. Such a tax slab is bound to hit domestic leisure,” said Kapil Chopra, president, Oberoi Group.

Dipak Haksar, chief executive for ITC Hotels and WelcomHotels, said the tax impact of 28% has certainly increased the vacationer’s spends. “We believe that a rationalised GST, benchmarked to international standards, could spur demand and make India a more competitive destination, earning valuable foreign exchange for the nation,” he explained.

Hotelier, T Natarajan, who owns the GRT Hotels and Resorts, estimates the drop in occupancies in his properties to be in the range of 10-12% for the upcoming season. GRT’s properties include the Radisson Blu Resort Temple Bay in Mahabalipuram and Radisson Blu Hotel GRT Chennai. “Certainly, there is a drop in occupancies and it will be around 10-12% in the upcoming season,” he said.

Since its implementation, the GST rates have caused confusion in the hotel industry with hotel associations opposing the 28% taxation on luxury hotels. Earlier, the 28% tax slab threshold was applicable to hotels with tariffs of Rs 5,000, but was later extended to hotels with tariffs upwards of Rs 7,500.

“People see coughing up the 28% tax as paying one third of their room rate. Average rates for some of our luxury rooms in leisure destinations hover around Rs 50,000 in winters. For a Rs 50,000 room, they will end up paying Rs 14,000 as tax. So, that is hurting them. Leisure bookings will get hit,” said a hotelier on condition of anonymity.

Chains such as Marriott and IHCL did not respond to emails seeking comments, while spokespersons for properties such as Hyatt Regency Mumbai and Park Hyatt Hyderabad said they have not seen an impact, given the two cities are prominently corporate, not leisure markets.

Travel Portal Booking.com said travellers now prefer to book home stays and villas for their holidays. “We feel this trend will continue for the upcoming year as well. We have seen softness towards the appetite for luxury properties due to high GST,” said Vikas Bhola, head of the Indian subcontinent for Booking.com.